U.S. stocks fluctuate after debt-limit deal as IBM, Goldman drop

U.S. stocks fluctuated, after the Standard & Poor’s 500 Index came within four points of a record, as investors assessed the effects of the budget standoff and International Business Machines Corp. and Goldman Sachs Group Inc. tumbled amid declining revenues.

The S&P 500 retreated less than 0.1% to 1,720.89 at 10:35 a.m. in New York after closing yesterday 0.3% from its record of 1,725.52. The Dow Jones Industrial Average declined 76.10 points, or 0.5%, to 15,297.76. IBM and Goldman, the second and third most heavily weighted stocks in the Dow, contributed about 90 points to the index’s retreat. Trading in S&P 500 stocks was 14% above the 30-day average at this time of day.

“A return to earnings and fundamental factors is the focus at this point,” Eric Teal, who helps oversee $5 billion as the chief investment officer at First Citizens BancShares Inc. in Raleigh, North Carolina, said by phone.

The benchmark equity gauge rallied 2.4% during the 16-day government shutdown that ended yesterday after President Barack Obama signed a bill to fund the government through Jan. 15 and extend the borrowing authority through Feb. 7.

Investors will now focus on the extent of the budget impasse’s impact on economic growth and whether the Federal Reserve will delay plans for reducing unprecedented monetary stimulus.

Economic Damage

S&P Ratings Services yesterday said the shutdown has shaved at least 0.6% off of fourth-quarter 2013 gross domestic product growth, or taken $24 billion out of the economy. IHS Inc. of Lexington, Massachusetts, reduced its fourth-quarter GDP growth estimate to 1.6%, from 2.2% in September.

A report today showed that more Americans than forecast filed applications for unemployment benefits last week. California continued to work through a backlog, indicating it will take time to gauge the impact of the federal shutdown.

The Fed Bank of Philadelphia’s general economic index fell to 19.8 this month from 22.3 in September. Readings greater than zero signal growth in the area, which covers eastern Pennsylvania, southern New Jersey and Delaware.